Mortgage Interest Rates Tick Higher

Good news out of China once again is driving mortgage interest rates higher this morning, as China states that both the US and China have both agreed to remove some existing tariffs placed on each other’s goods as part of the agreement that is expected to be announced here soon.  At this point, it seems likely that some type of a deal is negotiated.  Although it may not be the full agreement President Trump was after, it is a step in the right direction.  Also, it will help pave the way for a full agreement that could take away all fears of a full blown trade war.

The fascinating part of the trade war with China is just how good it has been for the US stock market.  Of course there were times when stock prices were driven lower as fears of how a trade war would impact the economy caused panic in the markets.  However, stock prices have blown way higher than most analysts believed was possible.  All in all, it has created significant wealth for those who have large holdings in the stock market.

As we stated yesterday, the bond market was sure to have a break out in one direction or the other in the short term.  Well, unfortunately the break out was not the direction the mortgage market would like to have seen.  As a result, mortgage bond prices are now once again beneath their 100 day moving average.  This is now the second time in all of 2019 that this has occurred.  Given that the last time only lasted a short time, there remains hope for a recovery.  But as long as positive news comes out of China, mortgage interest rates will likely continue to climb higher.

We will maintain our locking bias.